The holiday is especially popular in Mexico where it is a national holiday, and is celebrated in the Philippines, in Mexican-American communities in the United States, and to a lesser extent, in other Latin American countries. It is a public holiday in Brazil, where many Brazilians celebrate it by visiting cemeteries and churches, bringing flowers, lighting candles and praying.Though the subject matter may be considered morbid from the Anglo Saxon perspective, Mexicans celebrate the Day of the Dead joyfully, and though it occurs at the same time as Halloween, All Saints' Day and All Souls Day, the traditional mood is much brighter with emphasis on celebrating and honoring the lives of the deceased, and celebrating the continuation of life; the belief is not that death is the end, but rather the beginning of a new stage in life.

In homes observant families create an altar and decorate it with items that they believe are beautiful and attractive to the souls of their departed ones. Such items include offerings of flowers and food, but also things that will remind the living of the departed (such as their photographs, a diploma, or an article of clothing), and the things that the dead prized and enjoyed while they lived. This is done to entice the dead and assure that their souls actually return to take part in the remembrance. In very traditional settings, typically found only in native communities, the path from the street to the altar is actually strewn with petals to guide the returning soul to its altar and the bosom of the family.The traditional observance calls for departed children to be remembered during the first day of the festivity (the Day of the Little Angels, "Día de los Angelitos"), and for adults to be remembered on the second day. Traditionally, this is accompanied by a feast during the early morning hours of November the 2nd, the Day of the Dead proper, though modern urban Mexican families usually observe the Day of the Dead with only a special family supper featuring the bread of the dead. In southern Mexico, for example in the city of Puebla, it is good luck to be the one who bites into the plastic toy skeleton hidden by the baker in each rounded loaf. Friends and family members give one another gifts consisting of sugar skeletons or other items with a death motif, and the gift is more prized if the skull or skeleton is embossed with one's own name. Another variation found in the state of Oaxaca is for bread to be molded into the shape of a body or burial wrap, and for a face to be embedded on one end of the loaf. During the days leading up to and following the festivity, some bakeries in heavily aboriginal communities cease producing the wide range of breads that they typically sell so that they can focus on satisfying the demand for bread of the dead.